The question on every business owner’s lips (when it comes time) is, “when should I sell my business?” Entrepreneurs who find themselves asking this question are not always prompted by financial desperation, but usually because they are looking for the next opportunity. Deciding to sell your business can be a challenging choice at the best of times. All business owners will eventually exit their business; either by selling, passing it on to family members, or quietly closing it down. But the decision to sell can be prompted by a number of reasons:
- Time to retire.
- May wish to transition to a different industry/business model.
- Grown tired of the daily responsibilities of business ownership and consequential risk.
- Are compelled to sell because of personal or financial reasons (i.e. partnership split, divorce, health issue, impending bankruptcy, or moving away from the area, to name a few).
Listed below are three reasons to consider when thinking about selling your business:
1. Business Value
At any given time, as a business owner you may be presented with the opportunity to gain liquidity in your business. This is something that should be considered carefully. Running a business can be risky – the longer you hold onto that business, the bigger you grow and the risk of failure increases alongside it. There will always be value in a business; however, liquidity won’t exist until you go through a transaction, selling part or all of your business to a buyer.
2. Tired of Risk
In the start-up stages of a business, owners are more confident in taking risks. This is in part due to the fact that the equity in their business is yet to increase in potential. An established business will generate a greater appeal and return on investment at the time of sale. Taking chances are essential and beneficial if the founder wants their business to grow beyond the initial stages.
As the business grows, so too does the bottom line and value. As a result, owners instinctively become more conservative; avoiding risky scenarios that could potentially result in a loss to the business.
3. Time For Change
Although a chance at liquidity is a good reason for an owner to decide to sell (as previously mentioned), it may not be the only reason they decide to move the business on. Dedicating many long years, resources, and energy to establishing a business, many business owners will eventually find themselves making the shift towards retirement. If retirement is still a few years away, the prospect of a new and exciting opportunity outside of the business may be enough to peak the interest of owners and start the sales process. It is said that a good entrepreneur is always looking at their options going forward; to the future.
A business owner, no matter how big or small the business, must be careful to plan their exit strategically and be ready to take the leap when the timing is right to pursue your business’s maximum value. Another important consideration at this time is tax planning, so it’s a good idea to consult your Accountant along with your Business Broker when planning your exit strategy...
For more information on how to sell a business on the Sunshine Coast or in Brisbane, contact our friendly team at Verified Businesses today on 07 5479 5588. You can also see our recent market report on business sales in your area.
Thinking of selling your business? Want to know more about how to sell? Contact our friendly team at Verified Businesses for your own information pack or to book a consultation today. Our highly experienced team of business brokers are the Number #1 team on the Sunshine Coast in business sales. At Verified Businesses, success in business sales is Verified.